Clarification regarding Letter of Undertaking in place of a bond for export without payment of integrated tax for Exports

As per Rule 96A of the Central Goods & Services Tax Rules, 2017 procedure for refund of integrated tax paid on export of goods or services under bond or Letter of Undertaking has been prescribed. Further, Notification No. 16/2017-Central Tax, dt. 07-07-2017 has notified conditions and safeguards for the registered person who intends to supply goods or services for export without payment of integrated tax, for furnishing a Letter of Undertaking in place of a Bond.

The Central Government vide Circular No. 4/4/2017-GST dt. 07-07-2017 has further clarified the following:

1. The procedure for submission and acceptance of bond has already been prescribed vide Circular No. 2/2/2017-GST dated 4th July 2017.The bond will be furnished on non-judicial stamp paper of the value as applicable in the State in which bond is being furnished.
2. the exporters will furnish a running bond, in case he is required to furnish a bond, in FORM GST RFD -11 as the consignment wise bond would be a significant compliance burden on the exporters. The bond would cover the amount of tax involved in the export based on estimated tax liability as assessed by the exporter himself. The exporter will ensure that the outstanding tax liability on exports is within the bond amount. In case the bond amount is insufficient to cover the tax liability in yet to be completed exports, the exporter will furnish a fresh bond to cover such liability.
3. The jurisdictional Commissioner may decide about the amount of bank guarantee depending upon the track record of the exporter. If Commissioner is satisfied with the track record of an exporter then furnishing of bond without bank guarantee would suffice. In any case the bank guarantee should normally not exceed 15% of the bond amount.
4. LUT will be valid for 12 months. If the exporter fails to comply with the conditions of the LUT he may be asked to furnish a bond. Exports may be allowed under existing LUTs/Bonds till 31st July 2017. Exporters will submit the LUTs/bond in the revised format latest by 31st July 2017.
5. the Bond/LUT will be accepted by the jurisdictional Deputy/Assistant Commissioner having jurisdiction over the principal place of business of the exporter. The exporter is at liberty to furnish the bond/LUT before Central Tax Authority or State Tax Authority till the administrative mechanism for assigning of taxpayers to respective authority is implemented. However, if in a State, the Commissioner of State Tax so directs, by general instruction, to exporter, the Bond/LUT in all cases be accepted by Central tax officer till such time the said administrative mechanism is implemented.
6. Further Circular No. 26/2017 – Customs dated 1st July 2017 has clarified that the existing practice of sealing the container with a bottle seal under Central Excise supervision or otherwise would continue till 01st September 2017. Such sealing will be done under the supervision of the officer having physical jurisdiction and a copy of the sealing report would be forwarded to the concerned Deputy/Assistant Commissioner. These practices would also apply to exports made on or after 1st July 2017.